PARKS FOR DOWNTOWN DALLAS 450 1{c9) FOUNDATION August 24, 2016 Mr. Willis C. Winters, AIA Director, Park and Recreation Department City of Dallas 1500 Marilla Street, 6FN Dallas, Texas 75201 Dear Willis, | am out of town but have kept up-to-date on the due diligence project you asked Parks for Downtown Dallas {PfDD) to undertake with respect to Ron Natinsky’s proposal for the Pacific Plaza park site. The PfDD team headed by Ken Travis, the foundation’s long-time accountant and principal at TravisWolff LLP, met with Mr. Natinsky on Tuesday, August 10 at the TravisWolff offices. The team includes Bennett Cullum, an attorney for P{DD who is a partner at Bell Nunnally & Martin LLP, and Todd Awe, the Dallas real estate executive who has advised the foundation and overseen its park projects for the past 25 years. At the August 10 meeting, Mr. Natinsky outlined his ideas for the Pacific Plaza site and the PfDD team walked him through the attached list of considerations relative to his proposal. The list reflects our understanding of the points presented by Mr. Natinsky at a meeting arranged by CM Kleinman with Mayor Rawlings, President Wells and you in early July Following the August 10 discussion, Ken Travis summarized Mr. Natinsky’s responses and included observations about the park design Mr. Natinsky presented. These summary observations are highlighted in blue by each consideration on the PfDD list. pO Main Street, Suite 609 # Dallas. Texas T5202 ¢ 214-977-8267 nw M, Meaelows, PresidentOn August 17, Ken called Mr. Natinsky to schedule a follow-up meeting and on August 18, emailed to him the enclosed list of 28 open items / questions. Ken encouraged Mr. Natinsky to include at the follow-up meeting the other partners in the proposed parking garage project. Ken and Mr. Natinsky have since exchanged emails but no meeting date has been set as of now. Iam enclosing an interim due diligence report since you have reported that Mr. Natinsky and his partners are meeting with City Council members to introduce their ideas about the Pacific Plaza site. Details concerning the project they are promoting may be helpful as you respond to internal inquiries. The POD team is glad to meet again with Mr. Natinsky and his partners whenever they are available to address the open items on the list referenced above. While the PFDD team is not yet in a position to provide you a final due diligence report, | offer the following comments from the perspective of someone who has worked with you and your Park Department colleagues since the inception of the Downtown Parks Master Plan in 2002 1. The review and assessment of Mr. Natinsky’s ideas for the Pacific Park site are a matter for the Park Department staff and the Park Department board to deliberate and decide. When Mr. Natinsky contacted me in April to solicit support from PfDD, | told him that the proper process was for him and his partners to first gain the backing of the Park Department and the Economic Development Department. Through CM Kleinman and others, he has circumvented that process. 2. To the degree that | understand Mr. Natinsky’s proposal, the City would effectively convey the park site to a partnership that would operate a for- profit parking garage with a public amenity built on top of it. The City of Dallas has approximately $9 million invested in land acquisition for the majority of the Pacific Plaza site. Combined with the potential abandonment of one block of Live Oak Street and the inclusion of AstonPark (an existing public park), the site comprises 3.4 acres. Ata conservative valuation of $150 per square foot, the total site is worth $20.4 million today. Mr. Natinsky’s partnership is asking the City de facto to contribute the site to their venture with no purchase price consideration, no future income from the operation of the for-profit parking garage, and no recourse in the event of default. There are no guarantees contemplated with respect to maintenance and long-term capital repair of the public amenity / park The original Downtown Parks Master Plan and the 2013 Update of the Plan, both unanimously approved by the Park Board and the City Council, contemplate a collection of public parks serving the needs of Downtown residents, office workers and visitors. These are basically neighborhood parks that are easily accessed and enjoyed by their constituents. In 2012- 2013, Hargreaves Associates conducted a detailed assessment of the possibility of a sub-surface parking garage on the Pacific Plaza site and noted a number of compromises to the intended purpose of a park located there. SWA, the landscape architects currently designing Pacific Plaza, and Hargreaves have also pointed out that there are significant incremental costs associated with building a park on top of structure. In 2012-2013, the Park Board deliberated about these issues and declined to pursue the sub- surface garage option From a pure design standpoint, there is a real difference between a park built at grade on stabilized soil and a public amenity / park built on top of structure several feet above grade with walls along St. Paul and Harwood Streets, i.e. the design proposed by Mr. Natinsky’s group. In the latter case, park users will contend with garage ramps on two sides of the park site as well as vertical structures in the park that relate to elevators, stairwells and ventilation. Locating a public amenity / park on structure is also contrary to the strong desire for additional trees and other landscape elements expressed by residents, tenants and property owners who attended thetwo public input meetings sponsored by the Park Department, PfDD and SWA on March 29. 5. The benefit to the City as presented by Mr. Natinsky’s group is that their approach eliminates the need for the Park Department to invest $7.5 million in bond funds to build Pacific Plaza as designed by SWA (the remaining $7.5 million comes from the PFDD match and stakeholders who abut the park site). Oversimplified, this means the City is conveying a $20.4 million asset to Mr. Natinsky’s partnership for 99 years, with no economic return or control of the built improvements, to “save” interest plus amortization on a $7.5 million bond issuance. 6. Your due diligence request of PfDD did not include any background about the qualifications of the principals of the several entities involved with Mr. Natinsky’s proposal. We recommend as a routine matter that your staff and the City Attorney's staff do so; this would include relevant. development experience and financial management track records. 7. Should the Park Department and Park Board choose to pursue Mr. Natinsky’s proposal, PID would expect to be reimbursed by Mr, Natinsky’s group for the $476,000 we will have expended for (a) the SWA schematic design that will be completed next month under our contract with the Park and Recreation Department, and (b) the traffic study we commissioned at the Department’s behest with regard to the proposed closure of Live Oak Street between the Pacific Plaza land and Aston Park. Willis, we are glad to have assisted you in this due diligence process thus far and look forward to your direction as to any next steps that involve PfDD. Sincerely, Ae hews Robert W. Decherd Chairman